APEC Manila: A Tale of Two Summits

Manila’s just-completed Asia Pacific Economic Cooperation (APEC) was a tale of two summits. The official one centered on trade. The unofficial one focused on the South China Sea.

The official summit agreed on the need to fight terrorism, enhance economic growth, reduce poverty and increase climate change resiliency. That part of the meeting went pretty much according to plan.

APEC members agreed to undertake a yearlong study of the proposed Free Trade Area of the Asia Pacific (FTAAP) and to consider it at the next year’s meeting in Peru. This will shelve, at least for another year, competition between China’s vision of a Regional Economic Comprehensive Economic Partnership (RCEP) and the US-backed Trans-Pacific Partnership (TPP). Ideally, both can be folded into an even larger FTAAP.

Unofficially, the huge political gulf between the U.S. and China over the South China Sea was on display.

U.S. President Barack Obama called upon China to cease island building in the South China Sea. Obama visited a Philippine Navy frigate, emphasized the U.S.-Philippine mutual defense treaty, and pledged $250 million in military assistance to U.S. allies in Southeast Asia.

China claimed the U.S. was fanning geopolitical tension and repeated its demand that South China Sea territorial disputes be handled bilaterally. Because of China’s economic clout, this provides Beijing the upper hand.

China had insisted South China Sea territorial issues be left off the official agenda. To be certain it was, China foot-dragged on confirming President Xi Jinping’s participation in the summit until the last minute. As China and the U.S. sparred over the South China Sea outside the official sessions, smaller economies like Vietnam, Malaysia, Indonesia and the Philippines could do little but watch the fireworks and handicap the two contestants. All of Southeast Asia’s countries want Chinese investment and trade. But they also want the U.S. to protect them from China’s military.

All Southeast Asia’s countries worry about China’s unilateral land reclamation efforts in the South China Sea. These fears are multiplied by China’s characterization of any opposition to the activity as inflammatory.

Particularly inflammatory in China’s view is the Philippines’ pending appeal over China’s South China Sea island-building to a United Nations arbitration tribunal, which should rule next year.

The Philippines may be joined by Vietnam and Indonesia in making such appeals. For its part, Japan has indicated it could also do so over disputed islands north of Taiwan claimed by both Japan and China. While China supports the Law of the Sea under whose auspices the tribunal exists, China says it won’t recognize any ruling that goes against it.

That’s because China claims it’s being misunderstood. China says construction of military airstrips on uninhabited South China Sea sandbars in disputed waters is a ‘humanitarian’ gift to the region that improves maritime safety. But China fails to specify how. That, in turn, makes the claim ring hollow.

China insists anyone who poses such questions inflames tensions. Given this kind of backdrop, China has some justification for feeling misunderstood.

The result is that South China Sea territorial tensions are unlikely to go away anytime soon. The U.S. will provide military assistance to its allies like the Philippines, while China will plow ahead with its humanitarian sandbar building.

Developments that may change this could be a critical mass of regional opposition.

For instance, Vietnam and the Philippines could deepen military ties. Taiwan, which doesn’t agree with the Nine-Dotted Line, could get more vocal about it. Japan could forge deeper military relationships in the South China Sea.

If China’s big prize in the South China Sea turns out to be uninhabited islands with no global political legitimacy and a frozen conflict, China will have expended a lot of political capital for little, if any, goodwill gain.

However, there are causes for optimism. All sides could agree to shelve their disputes and agree to Joint Development Areas.

The South China Sea is believed to hold economic resources of oil, gas, and, potentially, methane hydrates. One explanation for China’s territorial stridency could be her belief that these are worth developing. Joint Development Areas agreed with her littoral neighbors that this would solve all problems at once.

China would get a ‘social license’ in the South China Sea. Southeast Asia’s poorer countries would get a deep-pocketed partner to pay most of the bills in developing these new energy sources. Joint Development Areas have a long history. They exist all over the world. Two exist in the Gulf of Thailand, just to the west of the South China Sea.

The other bit of good news in the South China Sea is that while the politicians squabble, the generals are talking. Both sides clearly realize the risk of conflict. The U.S. and Chinese navies now appear to be making a good faith effort to eliminate the risk of a mishap. During an inaugural defiance sail through disputed South China Sea last month, the U.S. Navy maintained regular radio contact with Chinese Navy ships tailing it.

U.S. Navy ships now dock in China for official visits. Last month, Chinese navy officials gave their US counterparts a tour of China’s only aircraft carrier. Three Chinese Navy ships are expected to dock soon in Hawaii.

At the operational level, these contacts reduce the risk of a Gulf of Tonkin mishap of the kind that pulled the U.S. into the disastrous Vietnam War in the 1960s.